Royal Mail Group (LON:RMG) has come under fire from investors as it wrote down 85 percent of the value of two recently acquired US parcel delivery businesses, the Financial Times has reported. The news marks a blow for the privatised postal group which warned on profits in October and recently reaffirmed its revised forecast.
Royal Mail’s share price, however, has surged in London today, having gained 2.46 percent to 324.70p as of 14:35 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 1.08 percent in the red at 6,973.97 points.
Royal Mail under fire over writedowns
The FT reported today that shareholders had demanded answers from Royal Mail, which wrote down 85 percent of the value of Golden State Overnight, which it acquired in October 2016, and Postal Express, bought in April 2017. While the company paid a combined $103 million (£80 million) for the companies, acquired through its international division GLS, it revealed last week that it was writing down their value by £68 million.
The newspaper notes that shareholders have asked for meetings with Royal Mail’s management to discuss its strategy as it continues with a North American acquisition spree, paying C$360 million (£213 million) for Dicom Canada.
“Shareholders are not especially happy with the company,” one shareholder told the FT.
RBC trims stance on postal operator
In other Royal Mail news, Proactive Investors reported today that RBC had trimmed its rating on the postal operator from ‘outperform’ to ‘sector perform’ on valuation grounds. The analysts now see the group’s earnings per share with a compound annual growth rate of -1%, between 2018 and 2022, with a super adjusted EPS for 2019 falling 12% year-on-year.